AIHW media releases

Health spending grows 10% to $87 billion

Health expenditure in Australia was $87.3 billion in 2004-05, according to a new report by the Australian Institute of Health and Welfare.

Head of the Institute's Expenditure and Economics Unit, Mr John Goss, said that total growth since 2003-04 was about 10%, or 6% adjusted for inflation and that average health services expenditure was up $361 per person to $4,319.

The report, Health expenditure Australia 2004-05, shows that as a proportion of Gross Domestic Product (GDP), expenditure on health increased to 9.8%, up from 9.4% in 2003-04 and 8.1% in 1994-95.

'Australia's health expenditure to GDP ratio is comparable to Canada, Austria and Norway. It is more than the UK and New Zealand, and considerably lower than the USA which in 2004 was 15.3% of GDP,' Mr Goss said.

The areas of health expenditure that showed relatively high increase were public health (14%), medical services (13%), ambulance services (12%), community health (11%), research (10%) and high-level residential care (10%).

'These six areas accounted for close to 40% of the health spending increase between 2003-04 and 2004-05,' he said.

The report showed the majority of health spending was funded by governments (68%) with the Australian Government contributing 46%. State, territory and local governments contributed 23%, and the non-government sector funded 32%.

The relative share of funding for public hospitals has been changing over the past decade. Between 1994-95 and 2004-05, the Australian Government share of public hospital funding decreased from 47.6% to 44.2%, while the state and territory government share of public hospital funding increased from 43.3% to 48.0%.

Hospitals represented the largest area of health expenditure in 2004-05 (33% of the total). Public hospitals accounted for $22.1 billion and private hospitals $6.9 billion. The private hospital share of hospital expenditure increased in the last decade from 21% of hospital expenditure in 1994-95 to 24% in 2004-05.